Tuesday, December 17, 2013

Bank of America has more credit card agreements in place with colleges and universities across the country, according to data published Tuesday by the Consumer Financial Protection Bureau. But the number of collegiate affinity programs it runs has shrunk by nearly two-thirds over the past two years.

Through its FIA Card Services subsidiary, Bank of America had agreements with 224 schools and their related organizations, like alumni organizations, as of the end of last year. The Charlotte bank's programs had close to a million open accounts. Bank of America paid more than $35 million to schools to secure them last year.

Just two years ago, Bank of America had more than 600 programs. Spokeswoman Betty Reiss said the bank said the affinity programs remain important to the bank's credit card business, but said the bank has "deliberately pared it back to focus on key partners with growth opportunities." The amount it's paid colleges for the programs has also shrunk, from $62 million in 2009.

The second-biggest collegiate card issuer was Capital One, with 55 agreements but only 6,000 members. JPMorgan Chase had 15 agreements, but 83,000 open accounts.

The Consumer Financial Protection Bureau disclosed the agreements as it presses banks and other issuers to share more information about its agreements with different schools. The regulator wants to post the contracts online.

“Students and their families should know if their school, whether well-intentioned or not, is being compensated to encourage students to use a specific account or card product,” director Richard Cordray said in a statement. “When financial institutions secretly give kickbacks to schools, they are engaging in risky practices.”

As part of a major regulatory overhaul aimed at protecting consumers from credit card abusers, banks are now required to disclose what agreements it has in place with schools. Some credit card issuers had been accused of using misleading tactics to get young people signed up for high-interest cards.

Bank of America pointed out that since its affinity program cards are marketed to alumni associations, the vast majority of customers are non-students. Reiss said the bank hasn't marketed credit cards on campuses in several years.

Bank of America stands out in a program that lawmakers and former Federal Deposit Insurance Corp. Chairman Sheila Bair have called a failure, leaving many homeowners worse off. The second-largest U.S. lender canceled more trial modifications than any mortgage firm and sent the highest percentage of rejected customers into foreclosure, Treasury data show.

To help run its modification program, Bank of America relied on managers who had worked at Countrywide Financial Corp., the subprime lender it took over in 2008. Those executives created and enforced quotas for resolving complaints, according to the former employees. Among them was Rebecca Mairone, found liable by a federal jury in October for defrauding government-backed housing companies Fannie Mae and Freddie Mac while working at Countrywide.

Urban Lending staff, struggling to meet those quotas, resorted to falsifying records and improperly purging complaints, the people said. They sent letters containing inaccurate statements on Office of the CEO and President stationery to lawmakers and U.S. agency officials who sought assistance on behalf of borrowers, the former employees said.